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John Mackey Education. (2013) 'Conscious Capitalism.'

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  CSPAN    Book TV After Words    John Mackey  Education.   
   (2013) 'Conscious Capitalism.'  

    February 11, 2013
    12:00 - 12:59am EST  

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he highlights the practices of companies like whole foods and southwest, that seek to increase value for their shareholders by creating value for their customers and employees as well. it's about an hour. >> john, it's a delight to see you again. let's set the stage for this. some people are going to pick up this book, see the title, and they're going to think, oh, boy, here we go another guy who doesn't like capitalism, who has a lot of criticisms of it, even made money as ceo, probably feeling guilty. the fact is you are quite a ferocious capitalist and what is interesting to me is that you weren't necessarily born that way but are somewhat of a convert, and you talk about your younger life as a young man, self-described progressive, living in a housing co-op, a food co-op, start a business,
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and your views at the time -- you embraced the ideology that business and corporations were essentially evil because they selfy,ly south only profits. then you start your business and the next thing we know you're reading milton freedman and we have whole foods. talk about that conversion, what you learned from your early experience and how you came to a point where you're now writing a book, not just calling capitalism a heroic enterprise but the fact you want to improve it. >> guest: the first thing to understand is i'm very idealistic and a great believer in capitalism. i think business is heroic. it has lifted humanity up out of the dirt and some of the statistics we discovered as we researched the book was that a culp hundred years ago 85% of the people alive lived on less than one dollar a day. today that's down to 16%.
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illiteracy rates across the planet were 90%. today they're 14%. average life span was 30. today it's 68. 78 in the united states, 80 in japan. so, humanity has made great progress. we're great believers in what business has been able to do. it's actually not the villain in the tale, it's the good guy. but when i was starting out -- we went the university of texas in austin, and that's a pretty progressive city, and i just sort of -- i didn't study business. i studied philosophy and religion and world literature and history and pretty much humanities, and when i started the business i had no background in economics or business or neglect, and -- but i knew i was going to have really low prices and i was going to pay really well, and i was going to be a
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different kind of business because i wasn't going to be like those other businesses. and of course, opposite you get into the real world and have to meet a payroll and you have to pay your bills and you're under capitalized, your philosophy of business evolves. it was very interesting to me because a lot of my friends from the co-op movement saw me as a traitor, i had gone over the dark side, and yet the business was struggling. we managed to lose 50% of our capital in the first year. renee, my girlfriend at the time, who cofounded the business with me, we were living in the store on the third floor and only makeing $200 per month each, way below minimum wage even back then. so i just began to move away from that philosophy, and as i was trying to figure out business, i started to read -- i read hundreds of business books, everything that was available i read.
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and to try to understand how to make the business successful. at the same time stumbled on to people like frederick hyatt and george guilder, and dozens and dozens of other thinkers. and i realized their explanations for how the economy worked and society worked made a heck of a lot more sense than the half-baked idea i had as a so-called progressive. so i abandoned that philosophy. it didn't work. in the real world it would prove to be unsatisfactory. so it's not so much that economics helped me to become a better business person so much as they just gave me a world view that made sense of what business was actually doing, and what i was doing as a business person. >> so,. >> host: so we understand the
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ideas like voluntary exchange, profits that they create good businesses but help society. what is conscious capitalism and how does it differ from what many of wuss call just plain old wonderful capitalism? >> guest: well, first thing to understand is we think business is good, and it's created a great value. but it can be better. it has greater potential than is being realized. and when you understand that when you look at the gallup poll that shows that big business in the united states has an approval rating of 19%. that means 80% don't approve of business. and when you see that even congress is at 17%, which is about the same level, only a couple points below it. you realize that people have lost confidence in business. and the narrative about business and capitalism has been controlled by the enemies of
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business and capitalism, and if you study history, you'll see that business people have always been held in disdain, throughout all history. a lot of business wasn't done by the elites. the elites were above common trade, and business was something often that fell on the -- in the shoulders of minorities such as in the west, jews, and in the east, the chinese, who, through hard work and enterprise, often times made a success of their lives and made money and that created envy, and persecution. they saw the jews run out of one country after another. supposedly bus of different religion and certainly contributed to it, but the big part of it was that they were economically very successful, and that was disdained by the intellectuals. the intellectuals have always hated business, and we can get into why that might be the case, if it served any useful purpose, but i think the most important
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thing to realize is intellectuals are not the friends of business, and not in the past, and certainly not today. so business is painted as fundamentally all about money. selfish, greedy, it's exploitative, and it only exists to make money. and i think it's -- if you go to a cocktail party and ask somebody randomly, hwa what is the purpose of business, people will give you an odd look. they'll probably say, that's -- what you mean? the purpose of business is to make money. but that's an odd answer. if you ask a doctor, what their purpose is, they are well compensated and also need to make money but won't say, well, my purpose as a doctor is to make money. a doctor heals people. teachers educate, architect design building, engineerings construct things, gorgeousists hopefully are helping to uncover the truth.
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>> host: we try. >> guest: yes, the potentially have a higher purpose of discovering what has been hidden away and bringing it to light and giving it a good interesting story that hopefully is a truthful story. so the professions all refer back to some type of higher purpose that serves other people. creates value for other people. business is the greatest value creator in the world. it creates the goods and services that make our lives better. creates value not for a few. it's not a zero sum game. business creates value for its customers, for employees, for its suppliers, for its investors and the communities it's part of. and all of that is done through voluntary exchange. so business is fundamentally good and has the great potential be heroic in terms terms of lifg humanity up to a higher level. >> host: you talk about doing that by having purpose, like you said in terms of -- the example
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our gave of a doctor, his greater purpose. what are the aspects of conscious capitalism? >> guest: well, we identify four key ten tenets of conscious capitalism. the all work together. the first one we talk about, which is business has the potential for higher purposeon making money. it's not that there's anything wrong with making money, of course. that's one of the things business does, it creates value for its investor stakeholders. but just as my body produces red blood cells and if i stop producing red blood cells, i'm going to die. but the purpose of my life is not to produce red blood cells. similarly, business cannot exist if it's not profitable. it will not have the capital it needs in order to renew itself to innovate, repair equipment to be able to respond to competition, so profit its essential to business.
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but every business has the potential for more transcendent purpose beyond that just as these other professions do. so, first business has to discover or rediscover its higher purpose, and by the way, most entrepreneur who create businesses are motivated by some type of higher purpose. they may not be conscious of it. it may not be explicit, but generally -- i've known hundreds of entrepreneurs and only with a few exceptions will they tell me i start evidence my business to get rich. most started their business because they were on fire about something. there was some idea, something they wanted to create, some difference they wanted to make in the world. another reason than just to show they could do it. and it's only later, when the business matures, that we hear or the economists come in and interpret that, well, it's all about making money. so, first, higher purpose. the second tenet is that we have
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this stakeholder system that -- it's not just about creating value for the investors, but there are other stakeholders that also party and they're interdependent with one another. the customers matter. the employees matter. the suppliers matter. the communities that we're part of matter. and so do the investors. and a simple example i use often times as a retailer that kind of explains this, is that at whole foodded market we try to hire the very best people we can fine, make sure they're well-trained and then management's job is to help them to flourish in the work place to give them the tools they need and make sure they're happy, because they're the ones that serve the customers. so, happy team members serve and create happy customers, and happy customers create happy investors because the business flourishes. so all the stakeholders are enter dependent. a company like whole foods market has 100,000 suppliers
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reason the world, and they are -- it's essential they also flourish. they help create our competitive advantage. they help create the special unique products and services that makes us stand out in the marketplace. so it's important our suppliers flourish. so once you realize that a business is creating value not strictly for its investors -- but all the stakeholders are interdependent, you view it as system, an integrated system, and you begin to ask questions, such as what strategies can we do in our business that allow all of our stakeholders to simultaneously flourish and prosper? >> host: what do you do? >> guest: the more important question might be, what do you do that might not result in creating the win-win-win scenarios. those might be strategies where one stakeholder is gaming and
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another one is lyings. sometimes you might see in business, for example, where -- it's like we need to get profits up, so we're going to raise prices, we're going to cut wages, cut benefits back, grind our suppliers down and that's going to result in higher profits. which indeed it might in the short run. but then sets up negative feedback loops. the customers find the prices high and go to your competitors you. wages are low, your benefits aren't as good and your employees take jobs with other companies. your suppliers don't have to trade with you, and if you grind them down they'll eventually phase you out as a potential customer. so, they're all connected together, and the strategy that you have to do is, how do we create value so that they're all simultaneously winning? i'll give you an example that ontimes people thing mike by a tradeoffful we created a
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foundation-called whole credit foundation, and does microcredit loans around the world in developing companies. we do projectness a country we're trading in, so for example, costa rica, so we'll be booking to locate the microcredit where we're actually doing business. now, the first -- somebody might say, well, you're being philanthropic with the investors' money. that's a type of theft. you should be philanthropic with your own money. and the narrow sense you can sort of make that case. itself doesn't create value for the investors. what we found with the whole planet foundation it's creating value for all of our stakeholders. our kemp customers, we market it in the stores and we tell the customers what we're doing, we do a prosperity campaign where they can donate their change to this process, and we gathered 5
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million last year from pens and nickels and dimes left over from people's change, and that -- our customers, therefore, are somehow connected to it and would we market it to online, and we receive hundreds and hundreds of letters from our customers, enthusiastic about what the whole planet foundation is doing to help end poverty. our team members participate partly through payroll deduction if they wish and also we have a volunteer program where our team members can volunteer at these countries we're doing the microcredit loans in. that's transformative experience for many of them. in fact i would say there's nothing our company has ever done that has raised the morale higher than the whole planet foundation. people are so proud of what whole foods has done in just eight years we have already helped over a million people. 93% of those are women to have better lives. it's quite phenomenal. our suppliers are also able to be participate in that. they contribute money to the whole planet foundation, and we
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advertise that and market that in our stores, as a supplier alliance so that gives them greater exposure to our customer base. that's a win for our suppliers to participate. is it good for our investors? absolutely. we've received millions, perhaps tens of millions of dollars of positive publicity and good will in our communities. it's helped whole foods market brand to be better known and better established throughout the world, and as a result, the investors gain as well. so all the stakeholders are winning. that's a within win-win strategy. >> host: some people might ask if whole foods isn't unique in its situation, though you. talk about purpose. there's a certain -- you didn't mention whole food's purpose but you lay it out in the book and it's something you have in your stores but your goal is to give people choices for healthier eating. that's one of them. so there's a certain almost -- i don't mean this dismissively --
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the missionary zeal behind your company. can other companies do this? for instance, if you are the world's largest creator of washing machine parts, can you really have a higher purpose in and orient your company around the sort of big ideas the way that whole fooleds can? >> guest: well, my first point to that is, grocery retailing is about as mundane a business as -- >> that a good point. >> guest: the fact we have been able to find a higher purpose, if a grocer can fine a higher purpose, arguably anybody can. using the example of washing machine parts -- >> host: just came to mine. >> guest: think about what wering machines do and how washing machines have liberated, mostly women, from drudgery, and washing clothes in rivers and streams and beating them against rocks, or watching them in sink by handis time, consuming and perhaps not the best use of
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people's attention and time. so, washing machines themselves have been a great technological advance for humanity. and if you're making parts to that. your higher purpose should dove tail. you want to create the very best washing machines or the most for aable washing machines that can reach the widest market possible. you're actually contributing to, i think, advancement of humanity, and i think that you should see it that would and market it that way. assuming that -- you can always find exceptional cases where somebody is actually doing a product that is actually really deeply harmful for people. i'm not saying that this is applicable to absolutely every business that exists. but it's applicable to more than 99.9% of them. >> host: let's talk about what it is not. some people will look at the title of the book and if they haven't read it, their first thought is going to be this is
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an explanation or a case for corporate social responsibility. and you're very clear in the book that is not what this is about, and again, this is corporate social responsibility, this movement you see often activists, using pensions funds or taking shares in companies, using proxies to try to push companies to change their policies, often environmental policies or labor policies, as at it the corporate socially responsible thing to do. what is different between that movement and what you're advocating sneer you talk about how companies need to do what is right. that's part of this argument. >> guest: of course, most people who first hear about this, people don't like to create new categories in their mind. already got a category, called corporate social responsibility. so they think this is just another version of that. and it's not. it's another way -- a whole new paradigm for thinking about business. it doesn't fit within that
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little box very well. and so early on in the book we make important to differentiate capitalil and corporate social responsibility. the biggest different is corporate responsibility is just a tradition business profit centric mottle that graphs on some type of social responsibility because they think it's going to apiece -- appease the critics. corporation plat social responsibility departments either report through public relation0s marking. they're seen as a way to improve the brand reputation of the company. so, they're often times accused of brain washing. you're just doing this for reputation purposes. it's not really -- just very thin, not really deep. cap conscious capitalism makes the community stakeholer or
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environmental stakeholder key, it's part of why you exist, it's part of your higher purpose, part of your mission. so these are not grafted add-ons to try to make you look better. they're at the essence of who you are. it's -- to talk about a conscious business, whether it's socially responsible or not, is almost a silly question. you have to be socially responsible. inherently they're creating value for customs and employees and suppliers, creating value for their investors and without -- almost without exception, also consciously trying to create value for the communities they're part of. mind you, even if they don't try 0 to consciously create value for the communities, the fact they're creating value for customers are employees and suppliers and investors is already inherently social responsible. business dunce have too redeem itself as it's somehow or other
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bad or evil or ethically neutral and then do it through good works. to redeem itself. business is inherently good if it's creating value for all those stakeholders. we think you can go a little beyond that and also consciously create value for communities as part of what your purpose and mission is. >> host: we talk about how business is inparently good and one of the -- inherently good, and it's an interesting book because it's partly the story of whole foods and partly an explanation of their philosophy, partly a how-too toe guide for some companies that might want to try this. talking about business being inherently good you do mention in the book the fact this is more necessary than ever because business has gotten a bad rap in particularly in recent years, especially after the 2008 financial crisis. one of your points in here is that business would do a great deal to help itself if it were acting more in a way like this and if it was setting an
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example. i'm curious what also you think the role of ceos and talking about capitalism and defending capitalism is? can you talk about the role of government sometimes and how it works against business? do ceos have a role in talking about and defending capitalism and explaining it to people or is it something you purely do by example? >> guest: i think that we do. i mean, one of the most disturb statistics for me is that for the longest period of time -- you have to understand the history of the united states we started out really poor. we were backwater in the united states. and really as we embrace capitalism in the united states, our -- we had tens of millions of immigrants come over here to create a better life because they had more freedom. they had the freedom to enterprise. the freedom to start businesses.
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and for the longest period of time, well over 100 years, the united states was the freest nation in the world in terms of economic freedom knowles capitalistic nation in the world, without exception. and a short period a time ago just the year 2000, for example, the united states still ranked number three on the economic freedom index, and behind hong kong and singapore, so we weren't number one anymore but we were still number three against pretty dynamic economies, hong kong and singapore. but over the last 13 years we are now dropped down to number 18. when people ask what's wrong with the economy, why such high unemployment, why has disposable income per capita declining and has over the last ten years? the answer to me is right there. we are less economically free today than we were 13 years ago,
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and as our economic freedom declines-as government regulation increase, taxes increase, the engine that is the basis for our prosperity, which is business, is lessened and our prosperity is, therefore, declining as well. the economic freedom goes down, so does prosperity. so if the capitalist -- if the business people aren't willing to speak up for free enterprise capitalism, we can expect economic freedom to continue to lessen and american prosperity will continue to lessen as well. we're far from being in a free enterprise capitalism system anymore. we're really moved toward as crony system where we have big government and big business ontimes colluding with each other. a great example is the fiscal cliff bill and you see payoffs
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for hollywood, alternative energy, the two that stand out for me, but all kinds of special deals being cut, and we're moving away from a system where people think it's fair, and that this is a system where you can get ahead and through hard work and enterprise, to one where people think, the way to get ahead is to be politically well connected and that's a real problem. >> host: is government intrusion also get in the way of this type of philosophy conscious capitalism? you talk about the need for businesses to not only be more holistic but to be long term, to but thinking not about hitting quarterly targets but these bigger objectives and how they roll out over a longer time horizon, and a lot of businesses would say, well, it's nice that john mackey says that but the reality is that, you know, sikh rules -- sec rules make so it hard for us to have transparent discussions with our investors
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and say what we're really thinking and waiting in the wings are the trial lawyers who are going to file a suit everytime we don't hit our numbers. there argument would be there are a lot of cultural aspects that are in place, that work against thinking this way. >> guest: let me make a couple responses. you have to see that -- why do we have such regulations in the united states? why are they growing so much? they're growing because in a sense people don't trust business any longer. we no longer have a consensus that businesses good. is a mentioned previously with the 19% approval rating, business is not seen at fundamentally trustworthy in our society, and if remember seeing a documentary called corporation a few years ago, which pretty well portrayed businesses and corporations as a bunch of sociopaths and only looking out
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for themes and the bottom line, and that's how many people see corporations in the world today. and so we've allowed government to increase to such a large scale, the people have, our sore site, because we want government to protect us from these sociopaths. so as long as you see corporations as primarily sociopathic, then the rationale for government to protect us from the sociopath is pretty compelling. so business itself has got to discover its higher purpose and act in a different way and improve that overall rating to get it up to 90% rating, and then the press for regulations to control us and protect us from the sociopathic corporations will lessen because it will be self-regulating and self-policing. so i sort of blame business for falling under the influence of the critics and beginning to act in ways that are detrimental to their long-term best interests. >> host: do you really think -- someone who lives in washington,
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writes about politics, do you think if 100% of businesses were today part of the conscious capitalism movement, this president wouldn't have introduced his healthcare bill and all its regulations? >> guest: i doubt this president would have been elected. >> host: okay. interesting thought. i also want to ask in terms of impediments to doing something like this. you have thought deeply about this for a long time and whole foods has had elements or -- off your philosophy in it from the beginning of its creation. what do you say to companies who i would say, look, if i were starting out, fabulous, i would love to do something like this, but there's simply no way in my business right now, with the unions i have in my business, with contracts i have in my business, with the regulations i already have on my business, to reorient myself, change my purpose, and align all my
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stakeholders. how do you do that? >> guest: well, there's no question it's a lot easier to start a conscious business than it is to transition to one. if you have a long legacy and a strong culture that is antithetical to it. it certainly will cause visionary ceo and leadership to make that transition. but it's my opinion that the conscious companies are going to dominate the 21st century landscape for one simple reason, it works better. a better way to do business, not just because it's ethically better. it just winness the marketplace. we need more research to prove the point but we started where we talk about how these conscious businesses have outperformed the indies sees, not by a little bit but by a lot over the last 15 years, the conscious public companies have outperformed the s&p 500 by 10x.
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that's a phenomenal traffic record. >> do they outperform someone like an oil company? >> well, coil toys can be conscious as well. and, again, oil is one of the key energies that helped get humanity left lifted out of the door. so the oil companies need to take their environmental concerns seriously, but they can be -- they can create value for customers, employees, suppliers, and they can have a higher purpose. so there's nothing that disqualifies them as potentially being conscious business. so, what happens in capitalism is whatever works better ultimately winness the marketplace. only, if this doesn't work better, it doesn't matter whether it sounds good or not. i won't spread. won't triumph in the marketplace. what we're seeing is that this type of philosophy is going to
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triumph in the marketplace. so companies will either begin to transition to more conscious, or they're going to fail and become dinosaurs and go out of business and new young entrepreneurial companies will take their place. many of the company wes most admire now for example, didn't exist 15, 20 years ago. certainly not 30 or oh years ago. the companies that have changed our lives and changed our world the most. google didn't exist. facebook didn't exist ten years ago. it's phenomenal, the whole internet phenomenonnan is less than 25 years of age. so, there's no amazon.com. the legacy companies will have to evolve or they will be outcompeted in the marketplace. it's that simple. not tomorrow but in ten year we'll be in a very different landscape, certainly 20 years. in fact i'd like to revisit this conversation in a decade and see if i'm correct.
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>> oo that's a deal. i should plan that. there is a think tank, not for profit, called conscious capitalism.com, and there are maybes -- ceos belong it to, designed to help people figure out how to do this? >> guest: capitalism.org. a nonprofit. if you type conscious capitalism.com you'll get it to. but it is a nonprofit organization, and we have a couple conferences a year. we do one for crowes that puts more -- it's a little smaller, more elite gathering. we're going to do something in san francisco april 5th and 6th. which we're happening to get a couple thousand people to that event, where we can begin to spread these idea now that the book has been launched. so we're trying to start a movement. our society is in decline, and unless we reverse it, unless we begin to rediscover our higher purpose as companies and businesses and once we begin to
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think about the greater good of all the stakeholders, that decline is going continue. we're going to see more and more government intrusions, less and less of a free society, and i love our country and i feel like i want to do what i can do to try to reverse that. >> i have to ask you, and you mention this in the book, a lot of this you talk about not just aligning stakeholders and having a purpose, you talk about conscious leadership and a conscious culture within the company. and a lot of that was very uplifting. talked about ceos needing to have more integrity, more trust, transparency. you actually talk about love in the workplace, the need for love, and you can get done with this and really feel inspired. i have to ask how that -- a lot of people will wonder how that meshes with one of the things they may know you for, which was this event a while ago where the sec was looking into you because you were posting on yahoo against a competitor, under
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anonymous name, critical comments about a competitor. some people might say, okay, how too you write about all these things, trust, and how do you reconcile it with that event? and since you bring it up in the book i want to ask you about it now. >> guest: i may be the only person in the world that doesn't see this as a contradiction. i don't see it as this big deal. the media sensationalized what happened, and because i was under investigation by the -- >> oo which was dropped. >> guest: which was dropped. i wasn't able to defend myself. i couldn't wife. couldn't do interviews, i couldn't post on my blog, couldn't do videos. i had to remain silent. so, the whole thing was sensationalized and it was smear. and still obviously dealing with it in a sense since i get asked they question all the time. so let me respond. first of all, what i said over eight year period, all in the public record. anybody can still go on yahoo, do a search and you can see --
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i'm not ashamed of what i wrote. i'm actually proud of what i wrote itch wrote very intelligent, thoughtful postings there, and as part of the anonymous thing, that's so blown out of proportion because people who are not familiar with how financial bull continue boards work. a good metaphor, when you go to a masquerade party at halloween you're in costume. so is everybody else. are you deceiving people when you do that? are you trying to pretend you're not kim when you're in a costume? obviously not. because that's the custom of the party. glory costume. so is everyone else. when you go -- you go on a financial built-in board like yahoo, you take a screen name. people don't post under their, quote, real names. you're posting as an anonymous person which is a good thing. that allows the power of the
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ideas to triumph. now, in terms of running down a competitor organization every an eight year period and 1400 posts i had a does that were critical of wild oats. the one that were taken out of context and repeated over and over again. i criticized whole foods from time to time is a well. it was a form of play. i had no diabolical motives here. i was trying to drive the stock price down, as if a post could affect markets. no can paid any attention. how many people read those posts? it was a community of a few hundred people at most. and we were just debating because i like to argue. i like to debate. i like too repartee of ideas. yes, i defended whole foods market and i occasionally criticize wild oats but not as a
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smear, as i was trying to drive down the stock price why we were trying to acquire it. that was such nonsense a., bus i had not a posted on that bulletin board for eight months, and secondly, an anonymous poster doesn't affect markets and never heard anybody stock price nor did i intent that. so i was having fun. i'm a very playful guy and i enjoyed that debate bet the subject i am most passion not a about, chess whole feuds market. i was usually defending the company against the shortness there telling lies about the company, and i would go in and tack my sword of truth within what i could disclose as a public company, and basically defend whole foods from the record. it was fun. i'm glad i did it. in hindsight, if i'd ever known anybody was going to care about that, i wouldn't have done it. i learned a valuable lesson but i'm not embarrassed or ashamed.
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i al cheng the viewer to read what i wrote. >> host: let's debate now this pigger idea. there's no question there's going to be a debate about this notion. you've already had it. since 2008 you have had a lot of different ideas coming out about how business should restore itself. you're not alone in this. there's been different talks about -- different forms of companies, the triple bottom line, benefit corporations, all these different ideas how to improve capitallity. of course the classical economickist say, capitalism doesn't need to be improved. it works very well the way it is. i went back and you mentioned this in the book you. had a fascinating debate back in 2005 with milton freedman, of all people, and i actually advocate everyone read it. it was incredibly thoughtful exchange. now, i'm not milton friedman,
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but he would make -- he made the point that, look, capitalism, when it is oriented -- the great beauty of capitallallism, when it's oreend around profit maximization. the argue. is you're a company and doing your job the right way, customers are getting great products and are willing to pay you, your suppliers are getting you rungs sold. your investors are making a return on your money. your employees are happy because your business is going and there's opportunities for advancement and greater pay. and that what is also really wonderful is this is very simple. it's one idea around which everyone can unite, and agree. and then of course there are all the side benefits which you mention in the book that go to society of decentralized and everyone is allowed to use the money they made from the venture to improve society as a whole through their own different decisions and get better his rays and better health and less
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poverty, all this stuff. i think the argument, classical economists make about what you're saying is if your argument is businesses need to do what is right, what you think is right, may be very different from what think is right and you have now injected this whole aspect of kind of judgment and all these questions into this that gets us away from the simplicity of profit maximization and could get in the way of it. what would be your response to that? >> guest: i have a number of responses. first of all, the paradigm you just articulated has held sway for decades now, and business' reputation is 19%, is not seen as fundmentality hill good good it's seen as greed and and exploitative and only caring about money. my first response is from a marketing standpoint, if you want to promote capitalism, you're going about it with a bad
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strategy. you're losing the argument. you're playing into the hands of the enemies and the critic. you're reinforcing exactly what they believe that all you care about is money. you don't care about anything else. that's my first response. my second response is that i call it the profit par docks,, - paradox, and i use happy inch if you want to be happy in your life, what i've discovered is that the worst strategy to achieve happiness in life is to make that your primary goal. if you make happiness actually what you're striving for, you will not probably achieve it instead you'll be self-involved, carrying about your own pleasures and your open satisfactions in life as your paramount goal. what i found is that happiness is best thought of as a byproduct of other things. it's a byproduct of meaningful,
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and family, and friends, and good health, and love, and care. we get happiness not by aiming directly for it but by throwing ourselves into life projects, involving ourselves into trying to have integrity and be a good person, and with we do those things happiness will come as a result of that. i've never aimed for happiness in my life but i'm a very happy person. it's byproduct of the other things. i think profits are similar. if you make them your primary goal you -- it does just the opposite. if people think that you're in it for just your own self-interest and the shareholders are it in for their own self-interest, there's no high are purpose that unites the stakeholders, then what is to keep everybody from just taking their own short-term interest into play? the customers just look for
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what's best for them. only at what is best for them. they don't care about the organization or your store and if it's in their best interests to shoplift and get away with it, why wouldn't they do that? if you're employees, why work hard if they can get away from shirking. they're look ought for their own profit, then -- if everybodies just looking out for their own profit, then you're not going to have the solidarity, the unity or the alignment you're talking about. instead everybody -- the simple will suboptimize itself because everybody is looking out for their own personal profits and instead what will unite people is more transcendent purpose that aligns these different stakeholders around that, and of course they still are self-bed but not exclusively. you cannot create the good society, and we failed miserably trying to create it strictly on the basis of your own personal self- . we're self-bed but a lot more
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complex than that. we also love, we also care, we also follow values, and that leads to beth the good society and happiness, is to go ahead and go after the good, the true, the beautiful, and heroic, play yourself into metabolizing those higher values and your businesses will flourish at the same time. you can't get there by putting the cart before the horse, and when you try to make profits the thing that unites it all, you'll suboptimize and i love to compete against businesses thinking that way. they're not going to beat whole feuds. >> host: freedman would say he did say john mackey and i agree but he make sound nicer than i do. his argument in that debate was, yeah, of course the company wants its business employees to be happy, of course the company wants a higher purpose, and of course -- but actually the reason for doing all those thing
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is is because when you do them well you make more profits. >> guest: that's the investor's perspective. bit if you take the perspective of the other stakeholerrers they see it differently, and -- >> host: so this isn't just marketing. >> guest: it's not just marketing. in -- milton -- frettedman was talking about -- friedman was talking about -- part of my response is -- i think i might have said something in the debate i had with him was -- million ton, then say it. if you say it's about creating value for these other stakeholers, then say that, too. don't just say, it's strictly about creating -- at least misunderstand examination attacks and plays into the enemy's arms. in fact business is the greatest value creator in the history of the world. capitalism this greatest form of social cooperation ever. let's tell the story about all the value we create.
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not just for the investors but for all the other stakeholders as well. it's partly just better branding and marketing, but it also is a revolution in the way we think about. i we start thinking about the good of all of these stake stoledders andol just our permanent good or the good of the investors. it's aer picture of what business is all about. and of course we have to create value for investors, and you shouldn't suboptimize the value creation for investors. and i argue that the way we're putting this forward is a better way to create more value for the investors as well. when you put the investors first, like happiness, your going to suboptimize happiness and investor creation. >> host: aren't there necessary tradeoffs and limits? we talk about this in a different form before. whole foods' higher purpose is gigging people choices to eat better. you talk about what you view that as being, largely a
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plant-based diet, for instance, you and yourself are a vegan. separately from whole foods you have made the point and a lot of people have that livestock raising around the world takes a toll on the environment, et cetera. and yet you sell meat in whole fooleds stores, and we talk about this. some people would say, okay, well, here's john mackey talking about how we have to do the right thing and on the other side he is chasing profits. how do you put those two things together? >> guest: perfection is not one of the options we have, and i don't think of it so much as tradeoffs -- often times if you look for tradeoffs you'll find tradeoffs and that's the way the analytical mind works. i goes in there and tries to pick things apart and fine the tradeoff. i always say when you find the tradeoff in business it's a failure of imagination imagination, failure of
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creativity that hasn't yet found that win-win strategy. the example you use, the reality of the fact is that we're in business to serve our customers. and our customers wrote when they come into hour stores and if we're not prepared to sell them the food they want to buy, it's not a so much we're chasing profits, is that we're trying to create value for our customers and they're the ones to decide what is valuable to them. we have a responsibility to try to educate them to try to influence them to make different choices, but the end of the day we in business serve them and they decide what is valuable to them. we don't decide them for them. i want want to live in a society where so-called experts are making the decisions for everybody, what is go for everybody else, and i don't like the way our society is drifting in that direction. i think people are responsible for themselves. they're accountable for their own choices but they should have the freedom to make their own choices. and business ultimately serves
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its customers, if you ever forget that you're going to fail as a business. that being said, when whole foods got started, we only sold about 5% of our total sales in organic foodded. now 30 plus years later we're up close to 50%. that's threw educating our customer base over 35 years. we're also trying to educate our customers about healthy diet and healthy eating, and it's not easy. people deal with food addictions. not like they can just shift overnight. but over time, we are educating people to make different choices. i would like nothing better than the customers to vote, the less healthy stuff out of the store because they just stop buying it. but until they do that we're in business to serve them. >> host: let me ask you about that. you talk about food addictions. one thing that truck me in the book -- i'm dying for you to explain this -- you talk eloquently about -- in the beginning when you're talking about capitalism, voluntary
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exchange. this is one of the win-wins of capitalism. market means people want to buy something, a company provides it and arch benefits. i i was struck by the fact that later in the book you are very indicate critical of some companies who you do not think are doing the writing and they exist to provide products to people that you think are unhealthy and you talk about tobacco companies and junk food companies. it's interesting to me, this is something you care deeply about because it's an aspect of 0 your life that you're devoted to making sure people eat more healthily and to that degree you think these companies are not right. the only problem i have with this -- this is what i'd like you to explain -- is that right is in the eye of the beholder, and i could go out and find five environmental activists who think bill oil companies north
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right because they produce a product that pollute owes environment or five concerned mothers who think that nickelodeon should be shut done because they don't like the programming, or five ardent filmisms who think mattel should be gotten -- >> you could eliminate every business. >> host: and then how do we fundamentally undermine the idea of von stare exchange? >> guest: we don't nugget the book that the tobacco companies should be made illegal or that junk food companies should be forbid ton attachment it is based on volunteer tear exchange and ultimately business there is to satisfy the needs and desires of its customer base. fast food companies, for example, they have served historically useful purpose. their products have been obviously overindulged in but they provide -- when you look at it historically they provide convenience, consistency, and affordability for many people.
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where those are things that people prefer. so, the challenge, of course, if i was running a fast-food company, would be, okay, how do we provide affordability, convenience, and quality, and constancy while upgrading and educating customers to make choses that are healthier for them. i think even a fast food company like that can begin to nudge its customer base not command them, to do so, but can help over time race consciousness, and i think in a sense they have the responsibility to do so. the tobacco industry is a tougher case. >> host: a conscious capitalist company? >> guest: i think they could if you look historically the way tobacco was thought about for a long time, as tobacco was something that calmed people, helped them concentrate, helped them relax. so, i think the challenge for
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tobacco companies is, is there a way to evolve their products over time to keep the good qualities that people seek out when the use the products without the damaging impacts, and maybe that's not possible. but that's what they could be aspiring to. and that being said, again, people have the right to smoke in my opinion, if they wish to and i would not urging that tobacco be outlawed or we go into prohibition. that would just turn a huge percentage of our population into criminals and with all the negative things that prohibition causes in terms of the criminalization of sew zurich it's a beside idea. that being saying, i'm somebody who believes in voluntary exchange of people making choices, but at the same time attempting to raise consciousness and educate people to make better choices for their own health and well-being. >> host: talk about little bit -- you are a ceo so you pend
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a lot of your time doing these things that all of your whole fooleds stores, and what was it like to write a book? what was the process? did you sit in betbed with your laptop and eat snacks or devote anytime your day? >> guest: i ate fast food when nobody was looking, candy bars s and congresses. >> host: smoked cigarettes. >> guest: really bad boy. >> host: writers block. >> guest: i learned how to write a book mitchell co-author, this was his seventh book and he really, i'm actually excited because i think i have three more books in me and i'm plotting them out. the first thing was he taught -- we did a technology called mind mapping. we were able to take the ideas we wanted to get -- put forth in the book and organize them in a brainstorming type fashion through software called mind mapping on your computer. that helped us organize the overall -- we could add it to or subdistract -- subtract as we
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went along but that what's big picture for the book. then when it cam to doing the chapters, we used dictation software, dragon dictation, hooked up to the computers, and i would look at the mind map and basically gist talk through the chapter. >> so you talked your book. >> guest: i talked the book. the initial rough draft was all verbally spoken. then you don't have writer's block. now you have 5,000 words down in a chapter quickly and you feel good about it because you have the core. then you have to do research. you haved to it and polish it. the other person put this input into it. >> host: is it mostly your voice or his voice? >> guest: we consciously made a decision for mostly my voice, but roger did more work on this book than i did, and he is -- has a higher standard of what is acceptable as a writer than i am. so, we were a great team. i realen video working with him,
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and the next book or two we're going to team um on those ace well. >> host: well, thank you so much for taking the time to do this. it was great to see you. >> guest: great to see you, too kim. thanks so much. >> ken anything neglect mack, the author of the new book, representing the race, the creation of the civil rights
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lawyer. tell me about your book. >> guest: my book is collective buying agraph of six african-american civil rights lawyers who practice law during the era of segregation, and it's about their collective struggles with both civil rights and racial identity. it's about the fact that to be an african-american civil rights lawyer in this era, i argue, is to be caught between the black and white world. both black and white things from these lawyers and identify with these particular lawyers. so to be this kind of lawyer, thurgood marshall and people like him, was not just being an african-american lawyer but somebody who was caught between the black and white worlds. >> host: how difficult for an african-american to become a lawyer during this time? >> guest: it's not difficult to become a lawyer. you have to go to law school. like everybody else. it does cost money. so, -- but it's very difficult to succeed as